Deciding to draw up your will might be one of the best things you ever do. But where do you start? This short guide provides you with a ‘to do’ list to help you prepare.
Before creating your will, you must consider what makes up your estate. Whilst you don’t aim to pass away anytime soon, planning for tomorrow by working out what you have today is essential.
List all your assets, property, investments, pensions and personal belongings, including your share of any joint assets. Assess their value and total them up. Next, list all your debts and, again, total them. Take your debts from your assets and you will arrive at your net estate. This is the figure on which Inheritance Tax is calculated.
Listing your assets will help you decide who you should allocate those assets to.
Don’t forget to address your digital assets. These include:
· Your email
· Social Media Accounts (Facebook, X (formerly Twitter), LinkedIn, Instagram, Pinterest, etc.)
· Digital music library
· Photo and video collections
· Files on your computer or stored online
· Crypto assets
You will need to think carefully about these and how you can allow someone to access them after your death so they can, where possible, be distributed according to your directions.
Once you know the extent of your estate, you will have a better idea of whether you have a potential Inheritance Tax problem. Inheritance Tax usually becomes payable when the net estate is more than £325,000. There are several exemptions and allowances which may affect whether an estate is taxable or not. Notably no inheritance tax payable for transfers between spouses or civil partners.
Seek professional advice to discover options to plan for and mitigate against Inheritance Tax.
Your executor is key to the proper and efficient administration of your estate. You must make the right choice. Select someone you trust to deal with your estate after your death, as they will be charged with following the instructions in your will.
It is also sensible to appoint more than one executor.
Before putting pen to paper, consider who you wish to leave your estate to. For example, do you wish to leave specific items or a cash gift to an individual, group of people, charity or community organisation? Make a list of your beneficiaries and what items or share in your estate you intend to leave to each.
After deciding on specific bequests and legacies, you must consider who should receive the remainder of your estate. This is called the residue, meaning anything left after individual estate items have been dealt with. You must decide how the residue will be dealt with as failure to do so will mean any residue will fall into intestacy and be dealt with under the default rules of Intestacy.
Consider what you would like to happen to specific gifts of cash legacies or the residue of your estate if those you’ve directed to receive them should die before you do. Make provision in your will to ensure that if someone you’ve named dies or, in the case of a charity or community organisation, ceases to exist, the share in the estate they were to receive is re-directed elsewhere.
If you have young children, you need to think about who you would wish to look after them if you and their other parent were both to pass away. In these circumstances, naming a guardian for any minor children is essential. It is vital to discuss the guardianship with those you wish to appoint to ensure they are prepared to take on the role. You will also need to consider what financial arrangements you need to put in place to provide for your children until they reach the age of maturity.
You must sign your will correctly. It must be signed in the presence of two independent witnesses who must be over the age of 18 and must also sign. The witnesses should not be named as beneficiaries in the will or related to a beneficiary in any way.
Once you have drawn up and signed your will, keep it secure and inform your executor(s) of its location. That means it will be easily found following your death.
Once you’ve made a will, it is essential to keep it under review. You should revisit and update your will after significant life events such as marriage, divorce or having children. Suppose you increase your wealth significantly or inherit a large sum of money or high value property. In that case, you should consider the impact on your estate and whether you need to review your will and any Inheritance Tax plans.
It also makes good sense to review your will every three or five years to check that the intentions you set down in your will remain your intentions at that point.
You can always write a letter of wishes for your executors to guide them on how you would like your estate dealt with. This letter might include details of how you would like your funeral handled. A letter of wishes is informal and not legally binding.
Last, but by no means least, when you decide to draw up your will, you should seek legal advice. By seeking legal advice, you will have peace of mind knowing your will has been prepared by a professional who is experienced in the field and that your will is valid. The last thing you would want is a will that is flawed and open to challenge, bringing confusion and upset to your beneficiaries.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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